Life Reassures GPW respond to premium increases
HARARE, The volume of life reassurance business written, in terms of Gross Premium Written (GPW), increased by 528,70% from ZWL$12.54 million reported for the nine months-ended 30 September 2019 to ZWL$78.84 million as at September 30, 2020.
Ipec, in its 9 months report on Life Reassurers, said the growth in GPW was attributable to an increase in premiums in response to asset valuations.
In real terms, the sector experienced a negative growth of 17.24% from ZWL$12.54 million to inflation-adjusted GPW of ZWL$10.38 million.
As at September 2020, all four composite reassurers, FM RE, Emeritus RE, ZEP RE, and FBC RE, reported capital positions that were compliant with the minimum capital requirement of ZWL$112.5 million
Ipec noted that adequate capitalization is important for life reassurers as they guarantee some of the risks carried by direct life assurers.
“All players are required to continuously carry out capital self-assessments in line with the provisions of Statutory Instrument 95 of 2017,” the regulator noted.
Total assets for life reassurers sector amounted to ZWL$1.08 billion as at September 30, 2020, a 31.39% increase from ZWL$822.06 million reported as at 30 June
“The growth in total assets was mainly due to an increase of ZWL$173.8 million in other investments.”
Two asset classes, equity investments and other investments constituted 99.08% of the total investments for the reassurance sector as at 30 September 2020.
Cash and near cash assets, which include money market instruments and cash constituted only 0.59% of the total assets. Composite reassurers are encourage to hold enough liquid assets to pay claims as they fall due.
Under the current inflationary environment, sector players are investing in value preserving assets to protect the underlying policyholder funds which they guarantee.
For the nine months period under review, the life reassurance sector’s profit after tax increased by 1424% from ZWL$8.42 million reported for the nine months-ended 30 September 2019 to ZWL$128.29 million for the nine months-ended 30 September 2020.
As at 30 September 2020, three (3) of the four (4) life reassurance players reported prescribed asset ratios that were below the minimum required threshold of 15%.
Current liabilities for the sector amounted to ZWL$495.62 million translating to working capital of ZWL$131.67 million for the nine months ended 30 September 2020.
The life reassurance sector’s average current ratio was 126.57% as at 30 September 2020. showing sufficient liquidity to cover short-term contractual obligations as they fall due.
The Commission urges the reassurance sector to hold enough current assets to cover its current liabilities.